A UBS Analyst Just Downgraded Goldman On Criminal Charge Concerns (And Now The Dow Is Off Triple Digits)

Update: We’re hearing that the analyst cited in the linked-to piece is not UBS’ primary Goldman analyst. We’re ivnstigating this further, though the fundamentals of the report, that a UBS analyst has downgraded the company. The primary brokers analyst at UBS is Glenn Schorr.


Original post: UBS analyst Dean Ungar just downgraded Goldman Sachs (GS), and made some very pointed comments in the report, saying that while the initial SEC charges weren’t enough to warrant a downgrade, the prospect of a criminal charge definitely changes the cost/benefit analysis.

Here’s the nut (Via Hedgeanalyst.com):

The shares are down 18% since the SEC civil suit was announced.
However, we do not think this means that an adverse outcome to the
criminal investigation is priced into the stock. We believe that in such an
event, downside to at least the tangible book value per share of USD 111 is
a reasonable assumption, which mean downside risk of 26%. Alternatively,
if the legal issues are resolved, we could see upside of 25%-35% over time.
We note that the negative publicity surrounding these lawsuits, even if in
the end nothing happens, could adversely impact the company’s client
relationships and hurt earnings. If charges are brought however, the
damage could be significant.

Shares of Goldman are off over 1.2% to $146.3.

Meanwhile the broader markets — which had been higher earlier in the day — are now solidly lower. The Dow is off over 100 points.

Don’t miss: The complete Goldman Sachs winners and losers >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.